It doesn’t matter if you are starting a business or looking to expand your current operation, there may come a point when you require capital.
While there are many ways to secure the funding you need, many business owners take the path of least resistance. Unfortunately, this can lead them toward a relationship with a loan shark.
Here are three of the main reasons why a loan shark relationship is bad for business:
- Lack of a formal agreement. Sure, a loan shark is willing to lend you money without much paperwork or documentation, but this can come back to haunt you in the long run. It’s much better to secure funding from a reputable lender that will require the signing of a formal (and legal) agreement before handing over the money.
- High rate of interest. At what cost are you willing to borrow money? No matter how badly you need the cash, it’s important to realize that a high rate of interest can actually hold you back over the long run. Loan sharks don’t offer loans at a low interest rate. This isn’t the way they do “business” so you shouldn’t expect it.
- More stress than necessary. Borrowing money has a way of adding stress to your life. This is even more so the case with a loan shark, as you know that missing a payment or attempting to renegotiate terms could result in a serious (and often dangerous) situation.
You want what is best for your business at all times. For this reason, you should never consider accepting money from a loan shark. No matter how good of an idea it appears, you don’t want to give in and travel down this road. There are other more reputable ways to get the money you need.
What are your thoughts on doing business with a loan shark? Do you have any personal experience with this? Share your advice in the comment section below.